October 20, 2002 Weekend Issue
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THREE IN A ROW! Scottrade is proud to announce its THIRD CONSECUTIVE ranking as Highest in Investor Satisfaction with Online Trading Services by J.D. Power and Associates! Thank you, customers! Scottrade: Member SIPC.
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/102002.htm
1) MARKET SUMMARY
Market consolidates with a modest gain on lower volume.
– A good day of rest as the market starts a breather holding its own.
– Consumer prices show no inflation, no deflation, just the same old nothing.
– Indexes close the week above the 50 day MVA for the first time since August.
– Subscriber questions.
http://www.investmenthouse.com/1weekendmarketsummary.htm “> Click here or on link for our full Weekend Market Summary
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2) Stock Splits
Playing stock splits can be very profitable, but it takes know-how.
Our stock split service focuses on three main types of plays:
1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).
For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term “would I buy this stock at this juncture?” position. Now there are times when a hot stock splits and investors pile in to get in while the stock is ‘cheaper.’ We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.
Remember, everything we do has to pass muster with the market that day … don’t fight the market on these plays. Here’s a post-split play to watch and our current analysis.
HCBK (Hudson City Bancorp–$18.44; +0.12; optionable): Savings and loans.
STATUS: See a pattern here? HCBK split in June and then corrected into a base. It has come off a short double bottom in September and October and is now forming a handle at prior resistance in the range of 18 to 19. Friday it showed a doji after testing 18 on the low as volume spiked sharply. A breakout over 19 is a buy point and the stock can basically give us our gain by rallying up to and slightly over the prior highs. That is something we like a lot in a play.
Volume: 657.4K Avg Volume: 250K
BUY POINT: $19.05 Volume=475K Target=$22.85 Stop=$17.55
POSITION: KHQ DC – April $15c (no OI) and/or Stock.
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Learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
AMLN (Amylin Pharmaceuticals–$17.63; +0.15; optionable): Drug manufacturer.
STATUS: New buy point. Testing the breakout. AMLN broke out in September, and now it is stepping up the short term moving averages, using them as support as it rises. Thursday and Friday AMLN sold back to the 10 day MVA (16.99), showing doji’s on those levels as volume moved back below average. This is just the action you want to see on a test. We will look for some rising volume on a move back up to add to positions. As stocks typically move up off the short term MVA 4 to 5 times before testing lower, this is also a good place for new positions for a move up to 23 ultimately before it starts a deeper test.
Volume: 838.959K Avg Volume: 848.007K
BUY POINT: $17.85 Volume=750K Target=$20.45 Stop=$16.15
POSITION: AQM DC – April. $15c (72 delta) and/or Stock.
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Learn more about our Technical Trader Report!
http://www.investmenthouse.com/1tech1.htm
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4) Covered Call Play
NCEN – New Century Financial Corp. is currently trading at $22.55. The November $22.5 Calls (UREKX) are trading at $1.95. That provides a return of about 9% if NCEN is above $22.5 on expiration Friday in November.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
Insurance broker U.S.I. Holdings Corp. pushed its planned initial public offering back a second time this week after sharply reducing its size and shifting from the New York Stock Exchange to the Nasdaq stock market.
The San Francisco-based company now expects to offer shares of the revised IPO on Monday, a delay of three trading days from Wednesday, when it was initially expected, according to an official at Merrill Lynch & Co (MER.N), the investment bank that is managing the sale.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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Scottrade: Ranked Highest in Customer Satisfaction 3 times! Apply now!
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The foregoing is commentary for informational purposes only. All statements and expressions are the opinions of Online Investment Services, LP., or Split Ventures, Ltd. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on the related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolios of writers for this issue may, in some instances, include securities mentioned herein and on the related web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. No one associated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites.
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